“Despite the fact that Lithuania’s economy is small and open and geopolitical risks persist, our country maintains a high credit rating. One of the most frequently cited reasons for this is adherence to fiscal discipline. Therefore, despite growing defence needs, it is important to maintain fiscal discipline – this is also of great importance for maintaining the country’s high credit rating, which determines the favourable cost of borrowing”, Minister of Finance Kristupas Vaitiekūnas states.
Fitch Ratings analysts state that Lithuania’s ‘A’ rating reflects the country’s reliable political system, based on membership in the European Union and the euro area, low general government debt, prudent financial management, and governance indicators that exceed the median of countries with the same rating (‘A’). According to the experts, these advantages are offset by the high probability of geopolitical risks, the small size and openness of the economy, and a lower GDP per capita compared to countries with the same rating.
Fitch Ratings forecasts that the general government fiscal deficit will increase to 2.7 % of GDP in 2025, broadly in line with the average for A-rated countries (2.9 %) and reflecting increased military and current spending. The agency's analysts believe that the higher fiscal deficit and large stock-flow adjustments will increase general government debt to 50.6 % in 2027 (the A average is 55.5 %). They also note that the country's GDP growth, which reached 3 % (the A median is 2.6 %) in 2024, will slow down to 2.6 % this year and accelerate again to 3.2 % next year, reflecting increased private consumption, which will be supported by the expected withdrawal of funds from the second pension pillar.
The credit rating agency's experts note that although Lithuania faces geopolitical tensions due to its borders with Belarus and the Kaliningrad region, the risks are mitigated by NATO membership, Germany's commitment to deploy a brigade in our country by 2027, and the Government's plan to significantly increase defence spending in the medium term and form a well-equipped army division by 2030.
Fitch Ratings last upgraded Lithuania's credit ratings in January 2020, when the long-term debt rating was raised from ‘A-‘ to ‘A’. The agency's latest report can be found here.
On 10 October, the international credit rating agency DBRS Morningstar affirmed the rating assigned to Lithuania – ‘A (high)’ with a stable outlook. DBRS Morningstar last changed Lithuania’s long-term debt rating in November 2021 – raising it from ‘A’ to ‘A (high)’ with a stable outlook.
On the same evening, another agency – Moody’s Investment Service – announced that it had completed its periodic review of Lithuania’s credit rating and provided an assessment of the prospects for the Lithuanian economy. Moody’s last improved Lithuania’s credit ratings in February 2021, when the A3 (positive outlook) long-term debt rating assigned in 2015 was raised to A2 (stable outlook).
At the end of May, the international credit rating agency S&P Global Ratings affirmed Lithuania’s long-term debt rating – ‘A’ with a stable outlook. The last time analysts at Standard & Poor's reviewed Lithuania's rating was in May 2024, setting it at ‘A’ (stable outlook) and leaving the A-1 short-term debt rating in effect.
More information about Lithuanian credit ratings can be found here.
Additional information:
A credit rating is an indicator that provides investors (creditors) with concentrated information on the degree of ability of the borrower to meet its financial obligations. A high credit rating indicates a lower risk of default by the debtor/issuer and, accordingly, a lower cost of borrowing.
Fitch Ratings is part of a group of three major credit rating agencies such as Moody’s Investors Service and S&P Global Ratings. For credit ratings they use particular grades and symbols and set a credit value to borrowing countries and companies by using standardized credit ratings. They use specific classifications and symbols to express credit ratings and determine the credit value for borrowing countries and companies by using standardised credit ratings.
